IN RE: BILLY T. BOOTH     CASE NO. 05-54191  ADV. NO. 06-5093 ORDER cross-motions for summary judgment  PERFECTION







BILLY T. BOOTH                                                                              CASE NO. 05-54191



ANNA C. JOHNSON                                                                                        PLAINTIFF

VS.                                                                                          ADVERSARY NO. 06-5093



U.S. CAR LLC d/b/a

CAR TOWN KIA, USA                                                                               DEFENDANTS


          This matter came before the Court on cross-motions for summary judgment filed by the Plaintiff Anna C. Johnson, Trustee, (“Trustee”) (Doc. 23) and Defendant AmeriCredit Financial Services, Inc. (“AmeriCredit”) (Doc. 25). The court has reviewed the supporting memoranda filed by the parties and all responses thereto; the parties’ Joint and Amended Stipulations of Fact (Docs. 17, 20); and has further considered arguments of legal counsel made at the July 12, 2006 hearing on the cross-motions, Trustee’s being a motion for partial summary judgment. Accordingly, being sufficiently advised, the court makes the following Findings of Fact, Conclusions of Law and Order:

Findings of Fact

          1. The Debtors Billy T. Booth and Henrietta Booth (“Debtors”) filed for Chapter 7 bankruptcy protection on October 3, 2005.

          2. The Debtors entered into a retail installment contract and security agreement with Car Town Kia, Nicholasville, Kentucky, for the purchase of a 2005 Kia Rio, VIN # KNADC125356400725 (“vehicle”) on July 11, 2005.

          3. The Debtors took possession of the subject vehicle on July 11, 2005.

          4. AmeriCredit is named as lien holder on the Certificate of Title for the vehicle issued on August 10, 2005.

          5. The first lien date of AmeriCredit’s lien on the subject Certificate of Title is August 1, 2005.

          6. The first lien date of AmeriCredit is twenty-one (21) days after the retail installment contract was executed and the Debtors received possession of the subject vehicle.

          7. The Trustee, as duly appointed, qualified and acting Trustee in the Debtors’ bankruptcy proceeding, filed the herein adversary proceeding on April 7, 2006 in order to avoid the lien of AmeriCredit on the subject vehicle, alleging that the same constitutes a preference in violation of 11 U.S.C. 547 and avoidable by her as Trustee pursuant to section 547(b) of the Bankruptcy Code.

          8. The parties have agreed that there are no issues of fact and that the matter is ripe for a summary determination as to (1) whether BR 9006 applies to extend the twenty (20) day time period set forth in KRS 186A195(5) as it relates to the date of perfection of AmeriCredit’s lien and (2) whether BR 9006 operates to extend the twenty (20) day period set forth in the “enabling loan” defense of section 547(c)(3) as to AmeriCredit’s lien.


Conclusions of Law

          1. In a preference action, analysis of the priority of AmeriCredit’s security interest in the Debtors’ vehicle begins with a review of state law determining how such interests are perfected, specifically KRS 186A.190, which provides that perfection of a security interest in any property for which there has been issued a Kentucky certificate of title shall be by notation on the certificate of title.

          2. KRS 186A.195 (5) provides that

[t]he security interest noted on the certificate of title shall be deemed perfected at the time the security interest attaches (KRS 355.9-203) if the secured party tenders the required fees and submits a properly completed title lien statement and application for first title or, in the case of property titled in the name of its debtor, the certificate of title to the appropriate county clerk within twenty (20) days of attachment. Otherwise, the security interest shall be deemed perfected at the time that such fees are tendered and such documents are submitted to the appropriate county clerk.

          3. A potential defense to trustee actions to avoid a preferential transfer is set forth in section 547(c)(3) of the Bankruptcy Code:

The trustee may not avoid under this section a transfer--

           (3) that creates a security interest in property acquired by the debtor


(B) that is perfected on or before 20 days after the debtor receives possession of such property. (Emphasis added).

          4. The only element which appears to be in question under the stipulated facts concerns whether the date on which AmeriCredit perfected its security interest in the subject vehicle satisfies the 20-day requirement as set forth in 547(c)(3)(B) to provide AmeriCredit with an affirmative defense to the Trustee’s preference action.

          5. Bankruptcy Rule 9006(a) provides in relevant part: “In computing any period of time prescribed or allowed by these Rules or by the Federal Rules of Civil Procedure made applicable to these Rules, by the local rules, by order of court, or by any applicable statute, the date of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, a Sunday, or a legal holiday, which event the period runs until the end of the next day which is not one of the aforementioned days.” (Emphasis added).

          6. The court notes that there is little case law determining the appropriateness of applying BR 9006(a) to the time period prescribed in 547(c)(3). However, it is persuaded by the analysis of the Bankruptcy Court for the Southern District of Ohio in Whittaker v. Bancohio National Bank (In re Lamons), 121 B.R. 748 (Bankr. S.D. Ohio 1990). In Lamons, the court observed that BR 9006 has been applied by other bankruptcy courts to the ninety-day period of section 547(b)(4) as well as to the ten-day period of section 547(e)(2) (citations omitted). Similarly, the Lamons court noted that the counterpart to BR 9006 in the Federal Rules, Fed. R. Civ. Proc. 6(a), has been applied to the ten-day reclamation notice as provided for in section 546(c) (citation omitted). Based on such other applications involving trustee avoiding powers, the Lamons court determined that BR 9006(a) should apply to the time period provided for in section 547(c)(3).

          7. This court also agrees with AmeriCredit that failure to apply BR 9006(a) to 547(c)(3) could result in secured creditors having several days less than the statutorily-provided twenty days within which to perfect their interests. Accordingly, the court concludes that 11 U.S.C. 547(c)(3) is “an applicable statute” for purposes of BR 9006(a) and that AmeriCredit perfected its security interest within the twenty (20) day period, as extended by BR 9006(a).

          8. Because the court finds as a matter of law that the affirmative defense prescribed under section 547(c)(3) may be invoked by AmeriCredit under the facts as stipulated to by the parties, the court sees no need to determine whether BR 9006(a) would apply to extend the period of perfection under KRS 186A.195(5). Consequently, the Trustee may not utilize 11 U.S.C. 547(b) to avoid the lien of AmeriCredit in the subject vehicle.



          Based on the foregoing Findings of Fact and Conclusions of law, the court HEREBY ORDERS that the Motion of the Trustee Anna C. Johnson for Partial Summary Judgment is OVERRULED and the Motion of the Defendant AmeriCredit Financial Services, Inc. For Summary Judgment is SUSTAINED, the parties to bear their own costs and fees.

          This is a final Order as to the motion of the Defendant AmeriCredit Financial Services, there being no just cause for delay.


Copies to:

Stephen Barnes, Esq.

Daniel Hitchcock, Esq.

U.S. Car LLC, d/b./a Car Town Kia USA